The subject of diversity and its impact on a business has been trending a lot in the last few years, linked to the discussion on gender equality and movements like Black Lives Matter. Too often, the focus is on how to solve the ‘problem’ when in fact diversity is not a problem to be solved but is the perfect solution to many other challenges for a business.
Evidence shows that it can have a very positive effect on results. One report by DDI World shows that organisations with great gender diversity are 1.4 times more likely to have sustained, profitable growth, which is the holy grail of all businesses.
Why is diversity so good for businesses and how can they ensure they are maximising the potential diversity can bring you?
It Is The Best Solution You Have
If we stop looking at diversity as a problem to be fixed, then what solutions does it bring to a business? Here are some of the most important elements that make up a successful and profitable business, we see how having a diverse workforce provides an ideal solution.
Know Your Customer
Every business starts by having something special to deliver and then identifying who their customer is. Even when appealing to a relatively tight niche, these customers will be a diverse range of people and if a business is to truly understand their customer, then they will need to mirror that diversity within their business.
This is critical for growing a profitable business because lacking diversity will severely limit the effectiveness of communicating with customers, affecting the ability to grow sales and manage those customers in a low cost and effective manner.
Businesses thrive by constantly evolving and coming up with new creative ideas and solutions. This is driven by having diverse minds and opinions, creating an environment to challenge and discuss new products and services.
A study by the Boston Consulting Group suggests that diverse teams were more innovative, earning almost half their revenues from new product launches, 20% more than less diverse companies. As companies look to grow, they need fresh thinking and to be continually looking at new areas, which only comes from having different voices involved.
Getting The Best People
The most successful businesses succeed because of the people that work there. This means a business wants access to as many good people as possible and its basic math that if you don’t have a diverse hiring policy, you will be cutting off access to a wide net of candidates.
You might believe that not having a diverse workforce shouldn’t affect how you hire, because you don’t actively look for a non-diverse person in recruitment, but the facts show that people will look at your diversity and decide not to apply or drop out of the application process.
One example comes from a Glassdoor survey, which says that 67% of job seekers say that a diverse workforce is an important factor in selecting a company. This is already something candidates are looking at and as Gen Z becomes the dominant member of the workforce, this will continue to grow, as they are the most diversity aware generation so far.
A brand is not a logo or a set of colours. It is about values, it’s what a business stands for and why they exist. The Nike swoosh is one of the most recognisable logos in the world, but its brand is not about the logo, it is about what they stand for.
They have appealed to a new generation because they stand for inclusion & diversity and therefore millennials and Generation Z are increasingly drawn to them. There is no better example than the Colin Kaepernick ad.
“Believe in something. Even if it means sacrificing everything. Just do it”
In the days after the ad first went live, sales surged by 31%! The ad reinforced the brand and appealed to its core audience, which is very diverse.
There Is A Cost To Not Doing This
As you see, the evidence for being diverse appears strong, with lots of data suggesting it improves bottom line performance, so naturally we can also see examples of how not being diverse is negatively affecting businesses.
A great example of this comes from a McKinsey report - ‘Delivering through Diversity’. It shows there is a penalty for not being diverse.
Companies in the bottom quartile for both gender and ethnic/cultural diversity were 29% less likely to achieve above-average profitability than other companies in the report.
This is interesting because it shows these companies don’t just fail to lead, but in fact, they are starting to lag behind other companies. And this will only get worse as the talent pool available for these businesses gets smaller, the varied voices at a senior level disappears and creativity takes a back step due to the lack of differing ideas involved.
In many ways, it becomes a vicious circle for these businesses and the only way to change this is an intentional effort to address the situation. It will require a pro-active approach to address the imbalance in a business because it won’t happen naturally.
How To Affect Change
If a business wants to start changing its diversity, then the start has to be measuring it.
“If you cannot measure it, you cannot improve it” – Lord Kelvin
This begins with the basic numbers and seeing how they trend over time and how they compare to businesses that are successful and have diverse workforces. But don’t be afraid to measure employee feelings on the subject as well. Even if the numbers start moving in the right direction, it’s important to check you are not fulfilling a tick box exercise with numbers but the people that matter are seeing a genuine change.
Without real change, you will still not have the reputation you desire, your turnover will not be addressed and ultimately, it’s not sustainable over time. By talking to your staff about the subject, you will likely get valuable input and ideas on how to change and improve the business. There is a reason diversity and inclusion go together as subject matters, so focus on both at the same time.